Morning Read: If Everybody Owns It, Is It ‘Alternative’?

By Brendan Conway

Market check: U.S. stock futures are flat Thursday morning. At 8: 30 a.m. ET, economists expect weekly jobless claims for the week ending Aug. 31 to clock in at 330,000, virtually unchanged from the prior week’s 330,000, while a 10 a.m. August ISM non-manufacturing survey is expected to show a slight decrease versus July. The story this morning is instead another jump in the 10-year Treasury yield, to 2.95%, a two-year high. There’s a similar pattern in European sovereign debt. “Everyone is waiting for these events, like the payrolls and the Fed meeting and that’s why we’ve seen pressure to the upside in yields,” Karsten Linowsky, a fixed-income strategist at Credit Suisse, told Bloomberg.

Fund watch: Is it still “alternative” if everybody owns it? That’s the question Ari I. Weinberg asks in this Wall Street Journal this morning. Answer: Probably not. “Author and financial theorist William J. Bernstein is inclined to believe that the popularity and availability of alternatives is their undoing, as he wrote in a 2012 e-book entitled “Skating Where the Puck Was: The Correlation Game in a Flat World.” He looked specifically at international real estate compared with U.S. real estate, commodities with stocks, and U.S. stocks with other developed markets. “A true alternative is, almost by definition, illiquid: It can only be traded with some difficulty, and thus will not be sold off quickly in a bad state of the world,” Mr. Bernstein said recently. That certainly doesn’t describe alternative ETFs.”

In the news: Speaking of alternatives, Murray Coleman, also in the WSJ, has a story on a fund built to hedge inflation, SPDR SSgA Multi-Asset Real Return (RLY). The actively managed ETF as of late August was invested about 46% in natural-resource stocks, 25% in Treasury inflation-protected securities and nearly 20% in real-estate investment trusts, Coleman writes.

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